Labor Market. Idaho’s unemployment rate is holding steady at 4.2 percent.
The state has added 5,000 nonfarm jobs to reach a total employment high of over 800,000 jobs in October. Nonfarm payroll is currently 3 percent ahead of where it was at this same time last year, led by 9.1-percent growth in the construction industry. The United States’ unemployment rate held steady at 5.1 percent, and year-over-year employment grew by 1.9 percent.
In further good news for Idaho’s unemployment, Micron Foundation recently agreed to contribute $25 million toward a materials science program at Boise State University. The program’s breakthrough research should create jobs for Idahoans both at Micron and at other high-tech companies. Boise is also looking to add tech jobs in coding and software development. Compared with other tech hubs, there aren’t as many software developers in Idaho, but efforts are underway to increase those numbers. Coding schools across the nation are training new programmers and coders quickly and cheaply. One such school is already in business in Idaho—BoiseCodeWorks.
Although schools like BoiseCodeWorks are producing successful developers, the American education system is not designed to promote this type of study. For instance, Pell Grants and other subsidies help students finance a bachelor’s degree, but such incentives are not available for coding schools. By providing loans and grants to encourage this innovative style of schooling, Idaho could improve its labor situation and lead the nation in an important and forward-looking approach to education.
Housing Market. Home prices stalled slightly both in Idaho and nationally in September. In Idaho, home prices fell 0.1 percent from the previous month but grew 5.8 percent compared to September 2014. Nationally, home prices increased 0.6 percent month over month and 6.4 percent compared to September of last year. Housing starts were up significantly in September, increasing 6.5 percent month over month and 18 percent year over year. The increase was mostly driven by growth in multifamily units such as apartments, rather than in detached or attached single-unit structures.
U.S. home values are drawing attention for their apparent resistance to the slowdown that is affecting the global economy. Home prices and rent continue to climb in the United States, fueled in part by tech-heavy geographies where an influx of developers, entrepreneurs, and associated support service employees bid up prices. For instance, San Francisco and Denver both saw a 10.7-percent year-over-year jump in home values—higher than any other U.S. city. It is unlikely that this torrid pace will continue for long; when interest rates increase, high home values will taper. In contrast, earnings have only increased about 2.2 percent over a year ago, well below the national housing price growth rate. While home prices are booming for now, economists don’t expect that to continue indefinitely.
U.S. Consumer Price Index. The U.S. Consumer Price Index (CPI) decreased 0.2 percent from August to September on a non-seasonally adjusted basis. The 0.2-percent drop was consistent with expectations of economists polled by Reuters. The Index remained essentially unchanged over the past year. Energy prices continued to decline in September, pushing the overall energy index down 4.7 percent. All energy sub-indexes contributed to the decline, including gasoline, fuel oil, electricity, and natural gas.
In contrast to energy, indexes for food increased slightly in September. The food index rose 0.4 percent—its largest increase since May of 2014. Other indexes, including shelter, medical care, household furnishings and operations, and personal care also rose, while apparel, used cars and trucks, new vehicles, and airline fares declined in price. The large decline in the energy index over the past year offset increases in the indexes for food and all items less food and energy.
Low inflation is a major indicator considered by the Federal Reserve in deciding when to raise the effective federal funds rate and tighten monetary policy. At this point, the U.S. CPI has consistently registered inflation below the Federal Reserve’s 2-percent target, which creates a major hurdle leading into the Fed’s next meeting.
U.S. Consumer Confidence Index. The U.S. Consumer Confidence Index declined 5.0 points in October to 97.6. The Present Situation Index decreased 8.2 points from 120.3 in September to 112.1 in October. The Expectations Index also declined, but only slightly—from 90.8 in September to 88.0 in October.
Consumers were less confident in the current situation of the economy in October. Those who believe business conditions are good decreased from 28.1 percent to 26.5 percent, and those who claim business conditions are bad edged up from 16.4 percent to 18.3 percent. Consumers were likewise less confident about the labor market: compared to 24.8 percent last month, 22.2 percent said jobs are plentiful.
Sentiment regarding the next six months was also down in October. While the percentage of consumers expecting business conditions to improve over the next six months remained unchanged at 18.1 percent, those anticipating more jobs in the next six months declined slightly from 14.9 percent to 14.5 percent. More telling was the percentage of consumers who expect fewer jobs six months from now, which increased from 15.9 percent in September to 16.9 percent in October.